Monday, July 23, 2018

Commission extends post-Lucia stay 30 more days

The SEC has extended a stay of pending administrative proceedings for an additional 30 days. The initial order was issued on June 21, 2018 and stayed pending administrative proceedings until July 23, 2018, or further order. The Commission stated that it finds it prudent to extend the stay until August 22, 2018, or further order of the Commission (In re Pending Administrative Proceedings, Release No. 33-10522, July 20, 2018).

Scope. As before, the order applies to “any pending administrative proceeding initiated by an order instituting proceedings that commenced the proceeding and set it for hearing before an administrative law judge, including any such proceeding currently pending before the Commission.” In these pending proceedings, the ALJ must issue a notice indicating that the stay has been extended. The Commission has retained the option, however, of assigning proceedings pending before an ALJ to the Commission itself or to any member of the Commission.

Lucia's effects. The Commission still appears to be mulling the practical consequences of the Supreme Court’s opinion in Lucia v. SEC, which left open several questions. For one, the Court declined to address the question of what effect should be given to the Commission’s earlier order ratifying the appointment of its ALJs in pending cases. But the Court did observe in a footnote that, with respect to Lucia, the Commission can hear the matter itself, or it can assign a new ALJ who was constitutionally appointed independent of the SEC’s ratification order.

In another reaction to Lucia, President Trump issued on July 11, 2018 an executive order excepting federal ALJs from the competitive service. The order states that removing ALJs from competitive hiring and selection rules will mitigate concerns about undue limitations on their selection, reduce the likelihood of successful Appointments Clause challenges, and forestall litigation on these issues. The order noted that in addition to holding that ALJs are “inferior officers” of the United States, Lucia may also raise additional questions about the method of appointing ALJs, including whether competitive examination and competitive service selection procedures are compatible with the discretion an agency head must possess under the Appointments Clause.